Best Buy 2005 Annual Report Download - page 99

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$ in millions, except per share amounts
believe the amounts provided in our consolidated financial
11. Contingencies and Commitments statements, as prescribed by GAAP, are adequate in light
Contingencies of the probable and estimable liabilities. The resolution of
those proceedings is not expected to have a material
On April 12, 2005, the U.S. District Court for the District
impact on our results of operation or financial condition.
of Minnesota entered an Order dismissing with prejudice
In Re Best Buy Company, Inc. Securities Litigation, the Commitments
purported consolidated class action lawsuit that sought In 2004, we engaged Accenture LLP to assist us with
compensatory damages, costs and expenses on behalf of improving our operational capabilities and reducing our
persons who purchased our securities between January 9, costs in the Human Resources and Information Systems
2002, and August 7, 2002. The lawsuit alleged that the areas. Our future contractual obligations to Accenture are
defendants, Best Buy Co., Inc., and our Chairman, our expected to range from $124 to $235 per year through
two Vice Chairmen (including our Vice Chairman and 2011, the end of the contract period. Prior to our
Chief Executive Officer) and our Chief Financial Officer, engagement of Accenture, a significant portion of these
violated Sections 10(b) and 20(a) of the Exchange Act, costs were incurred as part of normal operations.
and Rule 10b-5 promulgated thereunder, by making
material misrepresentations between January 9, 2002, We had outstanding letters of credit for purchase
and August 7, 2002, that resulted in artificially inflated obligations with a fair value of $92 as of February 26,
prices of our common stock. Subject to plaintiffs’ right to 2005.
appeal the Court’s Order, this matter is resolved. We As of February 26, 2005, we had commitments for the
believe the allegations are without merit and, in the event purchase and construction of facilities valued at
of an appeal, intend to continue to defend this action approximately $83. Also, as of February 26, 2005, we
vigorously. had entered into lease commitments for land and
We were also served with a shareholder derivative action buildings for 73 future locations. These lease commitments
venued in Hennepin County District Court, State of with real estate developers provide for minimum rentals
Minnesota, which raises many factual matters similar to ranging from 10 to 20 years, which if consummated
those raised in the federal securities law case, above based on current cost estimates, will approximate $53
described. This case alleges violations of state law relative annually over the lease terms.
to fiduciary responsibilities, control and management of We assumed a liability for certain extended service
our company and unjust enrichment and seeks judgment contracts when we acquired Future Shop in fiscal 2002.
in favor of Best Buy Co., Inc. against certain named We established an accrued liability for the acquired
officer and director defendants for damages, equitable extended service contracts based on historical trends in
relief and attorneys’ fees, costs and expenses. By product failure rates and the expected material and labor
agreement between the parties, this case has been on costs necessary to provide the services. The remaining
inactive status pending a decision on our Motion to terms of these acquired extended service contracts vary
Dismiss in the referenced federal securities law case. If the by product and extend through fiscal 2007. The estimated
plaintiffs don’t agree to dismiss the action voluntarily, then remaining liability for acquired extended service contracts
we expect the named officer and director defendants to at February 26, 2005, was $9. Subsequent to the
file a Motion to Dismiss. Based on our information and acquisition, all new extended service contracts were sold
belief, the claims against the named officer and director on behalf of an unrelated third party, without recourse.
defendants are without merit and, if necessary, will be
vigorously defended.
We are involved in various other legal proceedings
arising in the normal course of conducting business. We
83